The P0.30 per kilowatt hour (kWh) joint rate hike application of Manila Electric Company (Meralco) and San Miguel Global Power Holdings Corporation (SMCGP) scored initial victory with the 60-day temporary restraining order (TRO) issued by the Court of Appeals (CA) on the verdict handed down by the Energy Regulatory Commission (ERC) on October 4 this year.
In a resolution issued by the 14t Division of the CA, it directed the ERC and Meralco to refrain from implementing the order issued against San Miguel subsidiary South Premiere Power Corporation (SPPC) for the contracted capacity of its Ilijan gas-fired power facility.
SMC Corporate Information Officer Ferdinand K. Constantino, in a disclosure to the Philippine Stock Exchange (PSE), has confirmed their receipt of the CA decision relating to the Ilijan plant’s rate adjustment application.
In addition, he stated that SMCGP’s petition for certiorari of San Miguel Energy Corporation (SMEC) “is pending with the 17th Division of the CA,” adding that “such division has not taken any action or issued any order relating to such petition.”
The subject power supply agreement (PSA) in the Court-restrained rate hike petition comprises of the 670-megawatt power capacity drawn from the Ilijan gas plant in Batangas which is under SPPC; while the other pending case is with San Miguel Energy Corporation (SMEC) for the 330MW supply injected from the Sual coal-fired power plant in Pangasinan.
For the rate hike application, the SMC companies have been batting to recoup P5.2 billion worth of losses that they sought to be recovered within six-month duration via adjustments on their PSAs with Meralco.
The losses, according to SMC, had been due to swelling prices of coal and gas fuel prices in the world market which had been primarily triggered by the Russia-Ukraine war, hence, the conglomerate batted that such sudden surge on its fuel procurements be treated as ‘change in circumstance’ (CIC) in the power supply deals with Meralco.
Another factor that the conglomerate had cited as CIC in the contract had been the lingering Malampaya gas restriction predicament which affected the supply of gas to the Ilijan plant -- which in turn, had compelled SMC’s SPPC subsidiary to purchase more expensive fuel from the global market.
The ERC, however, had not given merit to the CIC justification cited by SMC and Meralco in their joint application for upward rate adjustments on the Ilijan and Sual plants.
On the restraining order issued by the CA, ERC Chairperson Monalisa C. Dimalanta sounded off “grave concern on the instantaneous effect of the temporary suspension in the implementation of the PSA based on the TRO.”
She stressed “this will consequently expose approximately 7.5 million registered Meralco consumers in the National Capital Region and other areas in Regions III and IV to higher electricity prices without preparation usually observed in case of PSA termination.”
Dimalanta primarily stated that “the fixed price PSA of Meralco with SPPC covers 670MW of capacity...this, along with the other fixed price PSAs, have been shielding Meralco consumers for the past several months from the volatility of prices from WESM and automatic fuel pass-through PSAs.”
She further emphasized that “if these PSAs are immediately suspended, this brings us precisely to the situation, which we at the ERC, have sought to avoid with our ruling that required the proper observance of the terms of the PSA, including the contractually-agreed process of termination.”